Nov. 4 (Bloomberg) -- UBS AG and Credit Suisse Group AG,
Switzerland’s biggest banks, may have to shrink their fixed-income, currencies and commodities activities if the nation’s
regulator imposes higher leverage ratios than currently planned,
according to JPMorgan Chase & Co. analysts.

Credit Suisse in particular would be hit by rules forcing
banks to hold more capital in relation to their assets, analysts
led by Kian Abouhossein wrote in a note to clients today. While
both firms are estimated to reach Swiss leverage ratios of at
least 4.2 percent by 2015, a Finance Ministry proposal that the
measure be raised to 6 percent would lead to “material
uncertainty” and possible cuts in FICC, they wrote.

Swiss Finance Minister Eveline Widmer-Schlumpf told Schweiz
am Sonntag in an interview published yesterday that leverage
ratios of “6 percent to 10 percent are being discussed,”
calling the current level “too low.” Banks would have to
“consider whether to carry on with investment banking or focus
even more on asset management,” she told the newspaper.

Global Efforts

The focus on leverage is the latest effort by global
regulators to prevent a repeat of taxpayer-funded rescues of the
financial crisis. In the U.S., banking regulators proposed
leverage ratios at 5 percent for holding companies and 6 percent
for their banking units.

Roland Meier, a spokesman at the Finance Ministry in Bern,
said by telephone today there won’t be any changes before the
results of a 2015 too-big-to-fail bank review are published.

UBS said on Oct. 29 it probably won’t be able to reach its
profitability goal in 2015 after the Swiss regulator demanded it
hold more capital for risks related to litigation. Credit Suisse
last month reported third-quarter earnings that missed analysts’
estimates as profit at its investment bank fell and said it’s
scaling back its interest-rates trading business.

Credit Suisse would have to cut exposure by as much as 284
billion francs ($312 billion), while UBS would have to shrink by
as much as 260 billion francs, JPMorgan said in the note.